A quarter of recent home sellers said they were dissatisfied with the service they received from their estate agent, reports the Office of Fair Trading today.

The consumers complained they received poor value for money, inadequate communication and said delays were too long.

The OFT said more vigorous price competition is needed in the estate agency market and recommends changes to the Estate Agents Act to enable more effective enforcement of consumer protection legislation to drive out those unfit to practice and to combat bad conduct.

The OFT also asks the industry to raise standards of customer service through better and more widespread self-regulation.

The report published today is the result of a 21-month inquiry into the way estate agents treat home buyers and sellers in England and Wales and was launched in June 2002 amid growing consumer concerns about the service they received from agents.

Agents earned an estimated £2.5 billion from the sale of residential property in England and Wales in 2002. Around 1.45 million property transactions took place that year, with an estimated value of £185 billion. More than nine out of ten people buying and selling a home in England and Wales use an estate agent.

The study examined competition in the market, levels of customer satisfaction, and the effectiveness of relevant legislation in tackling misconduct and unfit agents. It found that although the market structure is not uncompetitive, price competition is limited. Moreover, there is a high degree of customer dissatisfaction.

The OFT also identified some serious complaints such as failure by agents to pass on offers or declare a personal interest, and suggestions that buyers would be more successful if they used financial services offered by the agent.

Recommendations for more price competition

Only half of sellers surveyed by the OFT obtained quotes from more than one agent. However, those who did shop around and negotiate fees paid on average 14 per cent lower fees than others. For a property of average value, this represents a saving of about £300.

The OFT recommends that:

• Sellers shop around between estate agents and negotiate on fees
• Estate agents provide – and sellers request – fees quoted both in percentage terms and as a money amount. This should also be a requirement under any code of practice adopted by the sector.

Recommendations for regulatory change

The OFT recommends that the Act is amended so that:

• It is more enforceable - currently lack of access to evidence limits the ability to take effective action. For example, because much of the buying and selling process is conducted orally with little documentation involved, it is difficult to establish whether all offers are being passed on.
  The OFT recommends that estate agents should be required to maintain written records of offers, and that the enforcement agencies are given enhanced powers to access these when there are reasonable grounds to suspect that the Act has been breached.
• It is clear that it covers new ways of doing business. Recent years have seen the emergence of new ways of buying and selling property - e.g. over the internet - and further business models are likely to emerge in the future. It must be made clear that all these are covered by the Act.
• Statutory terms used in estate agency contracts are clearer - written in plain language so that consumers can fully understand the terms of their agreement before entering into it.